California Gets the Greenlight for Market Redesign

SEVERAL YEARSafter the state’s notorious energy debacle, the California Independent System Operator Corporation (California ISO) now has clearance to move forward with a major overhaul of the state’s energy market.

In September, the Federal Energy Regulatory Commission (FERC) unanimously approved the Market Redesign and Technology Upgrade (MRTU) program, which will implement a number of structural changes to the state’s power market.

The MRTU’s reforms include “day ahead” time instead of “real-time” operational functions to allow California ISO to respond to transmission bottlenecks much sooner. The reforms will also lead to more transparent market and grid data for generators and transmission owners.

A full network model of the grid will allow the ISO to see all transmission congestion on the grid the day before power actually flows. A component known as locational marginal pricing will reveal the true wholesale cost of delivering electricity where it needs to go.

The MRTU is considered critical to the future of California’s wholesale energy system. Although it is not expected to have an immediate impact on the average consumer, lower wholesale costs may eventually be passed onto consumers. It has a planned implementation date of November 2007. EC